Negative headlines weigh heavy on Emerging Markets

07.09.2018

August was dominated by negative news from the developing countries, or Emerging Markets.

The news was particularly bad from Turkey, South Africa and Argentina. Common to all these countries is their large foreign debt in hard currency, together with large ongoing budget deficits and balance of trade deficits (with the exception of Turkey). As the U.S. Dollar has shown an upward tendency for most of the year, the national debt of these countries has steadily become more difficult to service, says writes Chief Strategist at Sparinvest, David Bakkegaard Karsbøl, in his market comment for September.

Developments in the EM countries’ debt markets do not yet seem to have any significant effect on the developing markets. Apart from a handful of primarily Southern European banks and property developers with exposure in Turkey, a deterioration of Turkey’s problems will probably not lead to a spill over into other markets.

The stock markets have, however, received several helping hands in the form of quite a strong earnings growth, Trump’s tax reform and deregulation, together with a solid momentum and low volatility. However, in my view, many of these helping hands will disappear as we enter 2019, and unless the leading indicators soon bottom out it will be difficult to retain the stock market’s current momentum.

International Headquarter

Sparinvest is an independent provider of investment management and advisory services. Sparinvest’s products are aimed at institutional and private investors, and offered through an ever-increasing number of European-based financial institutions, banks, savings banks, asset managers, insurance companies, etc.

The information provided is not an invitation to purchase units of the sub-funds. Subscriptions of units in the sub-funds will be accepted only on the basis of the most recent Prospectus of the Fund and the latest Annual Report (or Semi-Annual Report, if more recent), which can be downloaded free of charge via this Web site.

To ensure that you receive the most accurate information on this web siteplease select your country of residence and currency you prefer.
Please read "Terms of Use" and "Cookie Policy" before proceeding.

Before continuing, please refer to the “Terms of use”. Availability of our products and services is subject to certain restrictions, products and services may be excluded in some countries. Copyright 2014 by Sparinvest S.A. - all rights reserved.

Disclaimer:
Please read these conditions before continuing. The products and services offered on this website are not available to persons with residence in particular countries. Please take note of the currently valid sales restrictions for the respective services.

This page uses cookies to gather statistics, to personalize and improve our content and for marketing, including targeted ads. This website uses third-party cookies. By browsing our website, you consent to our use of cookies. Read more